Credit Screening for pre-employment purposes

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The Federal Trade Commission, the Fair Credit Reporting Act, the Graham Leach Bliley Act, Title VII of the Civil Rights Act and all three credit reporting agencies, TransUnion, Experian and Equifax, all regulate the use of credit reports for pre-employment screening.

Credit records are often used as part of the pre-employment screening process. A company can find that it is a complex process to comply with all the legal issues surrounding the use of credit reports for pre-employment screening purposes.

In general, a company must be able to prove a "permissible purpose", before they can obtain credit reports for pre-employment purposes. In other words, you must have a legitimate reason to check your applicant's credit history; one that directly relates to the job for which they are applying. An applicant who is applying for an administrative position, who has no direct contact with customer bank accounts, credit card numbers, or access to company assets should not have a credit review as part the job application process. A position in accounts payable, however, for someone who has direct access to company financial accounts, could be considered a risk, and therefore, would allow the company to show a permissible purpose for making credit review part of the application process.

Be FCRA certified through the CDIA (Consumer Data Industry Association)

Knowledgeable about all laws and regulations concerning the FCRA as they apply to applicant screening

Able to provide you with the required forms and guidance needed to comply with all legal issues

Be wary of background check providers who are willing to provide you with Credit reporting, -no questions asked. They will not be doing you any favors and certainly will not stand behind you when legal issues are encountered.

Resources:

Free Public Records resources:  http://www.crimcheck.com/freerecords.htm

SHRM - Resume Fraud Statistics http://www.shrm.org/ema/library_published/nonIC/CMS_006087.asp

US Chamber of Commerce http://www.chamberofcommerce.com/public/index.cfm

FCRA http://www.ftc.gov/os/statutes/031224fcra.pdf

NAPBS http://www.napbs.com/

CDIA http://www.cdiaonline.org/

FACTA http://www.treasury.gov/offices/domestic-finance/financial-institution/cip/pdf/fact-act.pdf